A Third Way of Managing and Incenting a Growing
Electric Power Supply and Delivery System
Stephen T. Lee
Technical Executive
Power Delivery & Markets
Electric Power Research Institute (EPRI)
Abstract — Regulatory changes in North America since FERC
Order 888 in 1997 which required open access to the naturally
monopolistic transmission grid have been accompanied by
market failures and reliability problems. One year after the
major blackout on August 14, 2003, not much, if any, has been
implemented in the regulatory and financial areas to
fundamentally induce more transmission capacity to be built.
This paper will propose a third way of regulatory and financial
structures and incentives which may fix this problem, seeking a
balance between the traditional regulated and vertical utility
structure and the idealized power market designs which have
viewed the transmission grid as a monopoly requiring regulation.
This paper proposes a new way of combining regulatory
oversight with market-based incentives for transforming the
transmission companies into a business which will provide public
benefit solutions for the transmission investment problem. A new
area of research is proposed. It is to investigate a new economic
system, a third way, which overcomes the deficiencies of
capitalism/free market and socialism/central planning. This
concept is called Unity in Diversity-ism or UDI-ism. An example
of a long distance transmission project is used to illustrate the
concept.
The transmission grid is a natural monopoly and
therefore a transmission market operation will not
work.
•
Transmission access is not a commodity whose value
can be market-based.
•
Transmission charges based on actual usages are too
difficult to implement.
•
New
transmission
lines
crossing
multiple
governmental boundaries (provinces, states or nations)
are impossible to get approved because of local
interests and environmental objections
If we accept the conventional wisdom, then transmission
business will remain not a good business. Risk of investing in
long transmission lines crossing multiple state boundaries will
remain higher than the potential return on investment. A higher
regulated rate of return may not be sufficient.
In challenging these premises, a third way of managing and
inducing the growth and efficient operation of the transmission
grid is developed, as opposed to the vertically-integrated fully
regulated way and the current-day typical power market
approaches. It builds upon the work done in three areas: the
concept of the Community Activity Room [1], the concept of
the Virtual RTO (regional transmission organization) [2, 3] and
the concept of the Automatic Transmission Toll Collection
System [4, 5]. These three concepts enable financial
transactions to be done using computers and communication. It
will ensure that the providers of the market value of
transmission access receive their fair payments. In addition, the
concept of monetizing all cost and benefit elements, including
all externalities, into a complete economic framework will be
explored.
Keywords – Transnational Networks, Power System Planning
Under Market Conditions, Power Market Restructuring, Economic
Analysis
I.
•
INTRODUCTION
Regulatory changes in North America since FERC Order
888 in 1997 which required open access to the naturally
monopolistic transmission grid have been accompanied by
market failures and reliability problems. One year after the
major blackout on August 14, 2003, not much, if any, has been
implemented in the regulatory and financial areas to
fundamentally induce more transmission capacity to be built.
This paper proposes a different combination of regulatory,
financial and ownership structures, and incentives which may
fix this problem. The proposed structure seeks a balance
between the traditional regulated and vertical utility structure
and the typical power market designs which have viewed the
transmission grid as a natural monopoly requiring regulation
and open access.
This framework may provide the means for overcoming
local objections for building transmission lines that cross
multiple state boundaries. It may also provide the proper
financial incentives for solving some of the seams problems
related to Transmission Loading Relief between ISO/RTO and
non-LMP markets.
Following are premises that are challenged in this paper:
The vision of this paper is to develop a framework for
achieving unity in diversity, wherein unity means achieving
common good and diversity means maximizing personal
1
interests. The objective of this framework is to provide a public
good solution for all parties involved, generators, transmission
companies, distribution companies, customers, non-customers
and the states. It must be fair for all parties and it must balance
reliability, economics, the environment, local interests, national
interests, and perhaps even global interests.
II.
It can be a win-win-win for all three parties
In LMP market, if
bottleneck is not
removed, this is the
price customers pay.
Demand
Need to create
incentive to build
transmission by
letting the T&D
share in this value
Price customers are willing to pay
Price
Supply
Congestion Revenue:
T&D should receive a part of this $ value
WHY TRANSMISSION ACCESS MAY USE MARKETBASED PRICES
Price generator is willing to sell
When a power market uses supply and demand curves to
set market prices, all parties involved in completing the
transaction between the seller and the buyer are necessary for
the transaction to succeed. These parties are: the generator, the
broker (if any), the power exchange or the regional operator,
the transmission companies, the distribution company, and the
end-use customer.
With transmission bottleneck
Under regulation, if
bottleneck is not
removed, this is the
price customers get.
Perfect market and no transmission bottleneck
Quantity of Electricity
Figure 1 – Example of the Supply and Demand Curves for
a Power Market with a Transmission Bottleneck
In challenging conventional wisdom, one could ask why the
transmission and distribution companies should only be
reimbursed at cost plus regulated return, while the generator
and the broker (if any) receive the excess between the market
price and the cost of production. If the transmission or
distribution companies open the circuit breakers disconnecting
the generator, or disconnecting the customer, the supply chain
is broken and the transaction cannot be completed. As they are
indispensable to the transaction, it seems that they deserve to
share in the difference between the market value and the cost of
production.
economically justifiable. If the incentive and regulatory system
is set up right, it can result in a win-win-win-win situation for
the sellers, the T&D companies, the customers and the public.
III.
UNITY IN DIVERSITY (UDI-ISM)
One of the deficiencies of a pure market system is the
tendency towards a boom and bust cycle. Examples of that
include the U.S. real-estate bubble in the 1980s which led to
the collapse of the U.S. savings and loan associations, costing
the American taxpayer more than $100 billion [6]. Another
example is the telecommunication bubble which went from
boom to bust in just nine years, from 1992 to 2001. Even the
power market in California had experienced a cyclic
phenomenon where the power shortage in the summer of 2000
led to a burst of power plant construction which subsequently
slowed because of the ensuing drop in electricity prices. Joseph
Stiglitz, a Nobel economist, believes that his research on the
consequences of imperfect and asymmetric information (where
different individuals know different things) has shown that one
of the reasons that the “invisible hand” economists associate
with Adam Smith may be invisible is that it is simply not there.
They are not allowed to do so currently, because of the
concern about market power abuse. However, they provide
valuable and indispensable services, as much as the generator,
or a broker. There are no intrinsic reasons other the concern
about market power abuse to argue that they do not deserve to
share in the market value. So, if more regulatory oversight can
prevent market power abuse, why not share the excess of the
market value above cost among all parties involved? If this is
done, then the transmission and distribution companies will
become active market players and bring innovation to bear on
solving the transmission planning and operation problems.
For example, if the market system is a regional market
operator, and an existing transmission bottleneck causes the
market price to clear at a higher price than the ideal situation
without the bottleneck, there is a difference between the
demand curve’s price and the supply curve’s price, as shown in
Figure 1.
In the book “20:21 Vision”, Bill Emmott, the Editor in
Chief of The Economist, noted the failures of capitalistic
markets to address environmental problems and their
undesirable effects of increasing the income disparity between
the rich and the poor within a country and between the rich
nations and the poor nations [7].
In Figure 1, the congestion revenue represents the
difference between the price that the customers are willing to
pay and the price that the generator is willing to sell. It seems
reasonable that T&D companies should receive a part of that
value. If they do receive some revenue, the revenue they
receive should ideally be directed towards resolving the
congestion, e.g., by building more transmission capacity. This
way, the overall economic efficiency of the power market is
enhanced. The key challenge is to create a financial incentive
system whereby the bottleneck will be removed, if
In human history, two economic systems have been put to
practice. Central planning (as implemented in Communism)
and capitalistic market system engaged in a global competition
during the twentieth century. Central planning proved to be
stable but not conducive to innovation and economic
efficiency. In comparison, the capitalistic market system has
flourished. However, there are deficiencies in the capitalistic
market system as well. Many economists are considering
various alternatives and call them “The Third Way.”
2
A. Basic Principles of UDI-ism
The concept of Unity in Diversity (abbreviated to UDI-ism)
as proposed by this author is to preserve the creativity and
energy of capitalism and the free market wherein maximizing
self interests is the key ingredient for diversity and innovation.
At the same time, by aligning the diverse self interests more in
line with public interest, unity is achieved by channeling that
diversity into achieving both public and personal benefits. It
will modify the tendency of a market system for being shortsighted in maximizing short-term profits.
included in Tier 2 costs are explicitly considered in the
decisions of the enterprises. The result would be solutions that
are optimal from the total cost standpoint.
3) How Tier 2 Prices Are Determined
Ideally, Tier 2 prices should be based on a market-like
system. At the bottom is the cost, just like the production of an
orange has a cost, consisting of the allocated costs of the
grower, and the direct material and labor costs of producing
and harvesting the orange, etc. A tree in the forest has a cost
even though little or no money was spent by anyone on it. It is
only free because it had used free Tier 2 assets to become what
it is. A tree planted by the city on the street is not free. There
are direct expenses incurred by the city to buy the sapling, plant
it, irrigate it, prune it and maintain its health.
1) Tier 2 Assets and Prices
UDI-ism introduces the key concept of a social asset (or
Tier 2 asset), and the associated concepts of Tier 2 prices (or
Tier 2 costs and Tier 2 benefits.) By internalizing these social
costs into the economic and investment decisions of a firm, a
government or the consumers, it is postulated that the overall
economic efficiency of the entire system including all social
costs will be improved. This will overcome the deficiency of
many economic analyses wherein externalities are assumed to
be cost-free to the decision making.
Air is not free. Polluted air creates adverse health impacts
on the residents (and vegetation and wild life also), which
result in medical costs and the shortening of human lives,
which in turn has economic effects.
Water is not free. Its availability is often limited. Limited
resources carry economic values, quantifiable by shadow prices
or opportunity costs. Contaminated water, like polluted air, also
creates adverse health impacts and therefore also has other cost
effects.
The idea is to quantify and perhaps even monetize these
externalities, e.g., environmental costs, health costs, and other
social costs such as unemployment benefits and retirement
benefits. To monetize means to engage in real currency
transactions. Products which have these social impacts will be
shown to have a Tier 2 cost component in monetary terms.
a) Scientific Studies
Objective scientific studies can be conducted to quantify
these cost effects. It will obviously take time for such
quantification methodologies to be developed and analysis to
be done. In time, these data will become more available.
Including externalities into economic and financial
decisions is one key principle of UDI-ism. Monetizing these
externalities is significantly different from using laws to
enforce regulatory limits on Tier 2 impacts. It turns a passive or
combative attitude towards Tier 2 impacts into an enterprising
search for innovative and profitable ways to consider Tier 2
impacts in business or governmental decisions.
b) Polling
Polling is another approach for determining Tier 2 prices.
By conducting regular polls of the residents about the monetary
value of different degrees of clean air or clean water, for
example, without a controversial project approval currently at
stake, unbiased values of Tier 2 assets could be obtained
through scientific polls. Research is needed to develop
methodologies for inferring Tier 2 values by making relative
comparisons between two Tier 2 assets and looking for an
indifference curve.
2) Tier 2 Ownerships and Rights
Another key concept is that air, water, land, natural
resources, wild life, personal health, historical and
archaeological assets, etc., are assets that belong to the states
and their residents. In other words, they form a Tier 2 class of
assets. When enterprises use these assets or have adverse or
beneficiary impacts on them, they are making use of these Tier
2 assets. If this principle is accepted, the issue of ownership of
enterprises or their plants should be re-examined. As a
consequence, the governance and the decision making process
of the enterprises should also be re-examined in light of the
Tier 2 assets being used or impacted.
c) Trading
In cases where trading for Tier 2 assets or rights is done
through some market mechanism, e.g., air emissions, these
prices may be used, with care. Prices due to the supply and
demand for emission rights reflect the economic value of using
those limited rights. They do not reflect the economic value of
clean air to the public.
In short, the states and the residents deserve certain amount
of control of the enterprises and perhaps deserve to share in the
costs and profits of the enterprises.
d) Negotiation
Until the methods listed above are viable, a practical
approach to determine Tier 2 prices is by negotiation among
the parties involved. Subjective factors are involved but the
result will reflect a balancing of the willingness of the involved
parties.
If Tier 2 costs are monetized into product prices, then there
will be a Tier 2 class of revenues and costs to be accounted for.
The decision criteria of an enterprise would be to maximize the
total profit, which would equal (revenue – Tier 1 costs – Tier 2
costs). With this new objective function, externalities that are
3
B. How UDI-ism May Reduce Capitalistic Market’s
Deficiencies
UDI-ism will modify the behavior of consumers, businesses
and governments, by explicitly including Tier 2 considerations
and by providing direct financial incentives that align selfish
interests more closely with public benefits. Because Tier 2
considerations include long term costs and long term solutions,
decisions will be less short-sighted and therefore less prone to
the boom and bust cycles inherent in market systems.
that are adjustable to UDI-ism principles may be used to
modify business behavior. Tax credits based on performance
measures, e.g., average gas mileage or air emissions of car
fleet, may be used as direct financial incentives.
Certain externalities to current business decisions can be
partially internalized. An example is the cost of unemployment
benefits. Firms that lay off employees in a business downturn
are shifting their labor costs to the government. Firms that
outsource labor requirements to foreign countries are also
making the government bear the costs of unemployment and
retraining. By excluding these costs in their decisions, it is
likely that the decision is not optimal from the public interest
viewpoint. One way to internalize these considerations is to
debit a social account of the firm for part of the costs of the
unemployment benefits.
a) Monetized Tier 2 Prices Provide Direct Incentives
If consumer products such as a hamburger or a cigarette
include a Tier 2 price (whether it is a label designed for
consumer awareness or actually monetized into the total
purchase price) which reflects the social and health costs of the
products, consumers will buy fewer of the expensive products
and buy more of the cheaper products.
Individuals could also have social accounts that give credits
for Tier 2 contributions to society. For example, doing
volunteer social work would earn credits in the social account.
These credits would be translated into retirement benefits or
medical benefits.
Businesses will make better products, e.g., healthier
hamburgers and cigarettes, or more delicious and healthy fast
food. Innovative businesses will succeed and consumers are
also better off.
If environmental and health impacts due to different types
of power plants are explicitly priced in the cost of electricity
produced, then green energy will get a fair price treatment in a
competitive electricity market. New and cleaner power plants
such as fuel cells will also overcome the initial market barrier
sooner and gain their truly economic market shares. Society
will also be better off.
IV.
EXAMPLE OF A LONG TRANSMISSION LINE
Coming back to the power system problem, we will apply
the concept of UDI-ism to the construction of a long
transmission line crossing three states, from State A, through
State B, to State C. Customers in State B will use only 5% of
the line and therefore should pay based on the low usage.
Further, for this example, we assume that the Tier 2 impacts on
State B are highest among the three States.
If air pollution effects of health costs are included as a Tier
2 price in the cost of gasoline, instead of a fixed and nonmarket-based gasoline tax, consumers will modify driving
habits and buy cars that are less polluting. Revenue from the
Tier 2 price will go to the government just like the gasoline tax
and may be used to provide financial incentives for inducing
manufactures to make cleaner cars and for rewarding
consumers who buy these cars.
The capitalized Tier 2 costs (in million $) in the three States
are assumed to be quantitatively assessed and agreed among all
parties with some scientific method and polling of the people.
They are shown in Table 1. Note that economic benefits from
construction in the States are treated as Tier 2 benefits.
Tier 2
Land use
Vegetation effect
Wild life effect
Human health effect
Aesthetics
Water use
Air quality
Cultural or historical
Subtotal
Economic benefit
from construction
Net Tier 2 Cost
% Share
Car manufacturers may earn Tier 2 incentive payments
from the government by making and selling cleaner cars, and
improving the average gas mileage of their entire fleet, even
though their Tier 1 costs may be higher.
Car drivers, who pay higher gasoline prices but drive
cleaner cars with better gas mileage, may receive tax credits.
Tier 2 revenues can be used by the government to ensure
fairness and to reward desirable consumer and business
behavior.
Tier 2 costs, if monetized, will directly affect consumer and
business decisions.
b) Other Means to Incent Tier 2 Considerations
Before Tier 2 costs are monetized, it is possible to introduce
Tier 2 considerations as financial incentives into consumer and
business behavior by using other means such as taxation or
social accounts. Tier 2 price stickers have already been
mentioned as a way to influence consumer behavior. Tax rates
State A
5
2
1
5
3
0
0
2
18
State B
10
5
5
2
5
1
0
5
33
State C
5
1
0
10
7
0
0
3
26
Total
20
8
6
17
15
1
0
10
77
10
8
17.0%
10
23
48.9%
10
16
34.0%
30
47
100.0%
Table 1 – Example of the Tier 2 Costs for a Long Transmission Line
From the net Tier 2 costs, the percentage share of each
State based on Tier 2 cost is also shown in Table 1.
Next, it is assumed that the Transmission Company is
allowed to earn a 15% guaranteed rate of return plus a market
4
adder based on some kind of transmission toll collection [3, 4].
For the States and the residents to recover their Tier 2
investments, we assume a social discount rate of 5%. With a
project life of 40 years, the annual capital recovery rates are
15.1% and 5.8% respectively, as shown in Table 2.
State's Net Costs
State A
State B
State C
Total
It is then assumed that the annual market value adder
amounts to $5 million, and that the customers in State A, State
B, and State C, use 35%, 5% and 60% of the line each year.
The amounts customers in each state pay to the transmission
company are then shown in Table 2. Notice that both Tier 1
and Tier 2 costs are paid by the customers in each State
according to their usages of the line. It is assumed that the
Transmission Company collects both Tier 1 and Tier 2
revenues and then send Tier 2 payments to each State.
Transmission
Costs
100
47
147
Tier 1
Tier 2
UDI Total
Customer Costs
State A
State B
State C
Total
Annual
Charge
15.06
2.74
17.80
Market
Value
Adder
5.00
5.00
Customer
Cost
7.98
1.14
13.68
22.80
State's
Market State's Tier
Revenue 2 Revenue
0.27
0.47
0.78
1.34
0.54
0.93
1.60
2.74
State's Net Cost
Total to State &
Revenue Customer
0.74
7.24
2.12
(0.98)
1.48
12.20
4.34
18.46
Table 4 – Example of Net Costs or Benefits to the States
Finally, Table 4 shows the net costs and benefits to the
customers and the States, showing that the method is fair and
provides incentives for State B to allow the line to be built.
It would seem that UDI-ism, when applied to this long
distance transmission project, offers the following advantages:
Total
20.06
2.74
22.80
% Usage Tier 1 Cost Tier 2 Cost Total Cost
35
7.02
0.96
7.98
5
1.00
0.14
1.14
60
12.03
1.64
13.68
100
20.06
2.74
22.80
•
A negotiation framework for incorporating local
concerns into a fair mechanism for the allocation of
costs and benefits. The residents in each State take part
ownership of the project.
•
A market mechanism for transmission companies to
share in the market value of a transmission project
•
A full-cost evaluation of the project with a market test.
If this framework fails to show economic viability, this
project is not economical and should not be built.
Table 2 – Example of How Much Customers Pay for Transmission Access
V. EXAMPLE OF A SEAMS PROBLEM RELATED TO
TRANSMISSION LOADING RELIEF BETWEEN ISO/RTO AND
NON-LMP MARKETS
The distribution of revenue is shown in Table 3. The
Transmission Company is paid the guaranteed return plus a
share of the market value adder. This sharing of the market
value adder is according to the percentage of total ownership
(counting both Tier 1 and Tier 2 investments). Thus the
Transmission Company receives $3.4 million, while the three
States also receive their shares of $0.27, 0.78 and 0.54 millions,
respectively.
Currently, in the Eastern Interconnection of the North
American power grid, coordination between LPM markets and
non-LMP markets for congestion management is one symptom
of the seams problems. Transmission Loading Relief (TLR)
using the Interchange Distribution Calculator (IDC) for
flowgates that are impact by both types of markets require both
markets to re-dispatch or curtail their market operations. Equity
issues arise.
Revenue Allocation
Transmission Owner
State A
State B
State C
Total
Capital
100
8
23
16
147
Market
Tier 1 Value
Guaranteed Adder %Share
15.06
3.40
68.0%
0.27
5.4%
0.78
15.6%
0.54
10.9%
15.06
5.00 100.0%
Tier 2 %Share
0.47
17.0%
1.34
48.9%
0.93
34.0%
2.74 100.0%
In an LMP market, security constrained dispatches are
performed every 5 or 10 minutes. In anticipation of overloading
a common flowgate, the LMP solution would have already
adjusted the dispatch to stay within that flowgate limit. If a
TLR is called on that flowgate due to subsequent flow
increases, assigning flow curtailment amounts to the two
different markets raises the equity question. Should the LMP
market be given a credit for its prior “re-dispatch” in
anticipation of the flowgate limit? How can that amount be
determined?
Total
18.46
0.74
2.12
1.48
22.80
Table 3 – Example of How Revenue is Allocated
Tier 2 revenues go only to the three States and not to the
customers in the States, according to their relative share of the
Tier 2 investments, shown earlier in Table 1. It is up to the
States to decide how to use their Tier 2 revenues for their
residents, of whom electricity customers are only a subset.
Thus, State B, having incurred greater Tier 2 costs than the
other two States, receives $1.34 million in Tier 2 revenue, as
compared with $0.47 and 0.93 for States A and C, respectively.
A market solution to this problem is to introduce the
Automatic Transmission Toll Collection system [4]. If a realtime congestion-based toll charge is collected on that common
flowgate, based on computed usage of that flowgate by the two
markets, then the two markets will respond to the price signal
and the actual transmission usage charges that they incur. This
is applying the principle of internalizing previous externalities
into the market decision. It is similar to relying on a
congestion-based toll charge for a bridge to let the users decide
5
whether to pay the toll or take a different route. The concept of
an equitable claim on the bridge capacity is irrelevant in a
market system. If the congestion remains on the flowgate, the
congestion toll charge will increase until the flow pattern
changes from both markets for the flow to return to below its
limit.
VI.
HOLISTIC TRANSMISSION EXPANSION PLANNING
One new way of looking at transmission expansion is to
apply the concept of the Community Activity Room (CAR) to
the problem [1]. A new paradigm recognizes that in a power
market, power plant and transmission investment decisions are
made separately by different business entities. Transmission
investments may be more suitably handled with the nondiscriminatory objective to expand the size of the CAR in order
to accommodate as much of the generation and load market
activities as possible. The tradeoff which puts a limit to the
transmission investments would be between costs and the
potential curtailment of the electricity energy market due to
lack of transmission capacity.
Figure 2 – Sample System Before Expansion
A technique has been developed by the author to solve the
following problem. Given an existing transmission grid, the
boundary of the CAR can be determined in the operating space
of the generation and load injections, aggregated and reduced
to a three-dimensional operating space. Historical hourly
records of the generation and load injections can be statistically
analyzed and then aggregated and reduced in dimensions.
These data can be modeled by Gaussian probability
distributions and then projected into future years. The
mathematical problem of expanding the walls outward in order
to tangentially bound and enclose the Gaussian probability
distributions can be solved analytically. The result would be a
holistic set of transmission capacity increases which are needed
to enable the market to freely move within the CAR in a future
period.
2-4
1-4
This concept is demonstrated on a simple network and
shown in Figure 2 and Figure 3. In Figure 2, the operating
space without any transmission overloads is indicated by the
white area. The color bands represent increasing levels of
overloads if the operating point goes outside of the white area.
If it is desirable to allow future operation to enclose a new
operating point at the coordinates of (6000, 6000), the best way
to expand the transmission system is to push two walls
outward, as indicated by Figure 3. The lines from bus 2 to bus
3 and from bus 1 to bus 4 should be increased in capacity
accordingly. The resulting feasible operation region, as shown
in the white area of Figure 2, should the holistic effect of this
transmission expansion plan.
Figure 3 – Sample System After Expansion
VII. R & D RECOMMENDATIONS
This paper has challenged the way we treat transmission as
a business. It has proposed a Third Way economic system
called UDI-ism that holds some promises for improving the
capitalistic market system. It has proposed the idea of applying
UDI-ism to the power market problems, especially in the
transmission planning and operation area, building on top of
the concept of the Community Activity Room (CAR), Virtual
Regional Transmission Organizations, and Automatic
Transmission Toll Collection.
The power of this direct approach is promising. More
research is needed to verify its accuracy. More research is also
needed to apply it to larger systems. It offers the potential to
develop coordinated regional transmission plans and to
visualize the holistic benefits in a way and in a metaphor that
common people can understand.
6
[5] S. T. Lee, “An Automated Transmission Toll Collection
System and Virtual RTO Enable Transmission
Investments in a Hybrid Power Market”, EPRI Technical
Update, #1002636, November 2003.
Research is proposed along the following areas:
1.
Methodologies for quantifying and obtaining market
values for Tier 2 assets
2.
Simulation of consumer and business behavior under
UDI-ism
3.
Evaluation of the advantages and disadvantages of
UDI-ism, as compared with capitalistic market system
4.
Evaluation of incentive systems to induce the
economic expansion of a transmission grid to provide
public benefits under a power market
5.
Methodologies for determining holistic transmission
expansion plans using the CAR concept
[6] Joseph Stiglitz, The Roaring Nineties, Penguin Books,
2003.
[7] Bill Emmott, 20:21 Vision – Twentieth-Century Lessons
for the Twenty-First Century, Picardor Edition, March
2004.
BIOGRAPHY
Stephen T. Lee (IEEE M’69, SM’75) is
Technical Executive, Power Delivery and
Markets, in EPRI. Dr. Lee has over 30
years of power industry experience. He
received his S.B., S.M. and Ph.D. degrees
from M.I.T. in Electrical Engineering,
majoring in Power System Engineering.
He worked for Stone & Webster
Engineering in Boston, Systems Control,
Inc. (now ABB) in California, and he was
Vice President of Consulting for Energy
Management Associates (EMA). Before
joining EPRI in 1998, Dr. Lee was an
independent Consultant in utility planning and operation. At EPRI,
Stephen Lee is leading technical research programs for grid operations
and planning and power markets. He is also active in the North
American Electric Reliability Council (NERC) on issues related to
interregional operation and planning. He has been actively developing
new concepts and tools for power system operation and probabilistic
transmission planning.
REFERENCES
[1] S. T. Lee, “Community Activity Room as a New Tool for
Transmission Operation and Planning Under A
Competitive Power Market,” IEEE Power Tech 2003
Conference, Bologna, Italy, June 2003.
[2] Stephen
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[3] S. T. Lee, “Virtual Regional Transmission Organizations
And the Standard Market Design – A Conceptual
Development with Illustrative Examples,” EPRI
Technical Update, #1007680, January 2003.
[4] Stephen Lee, “Automatic Tolls Enable Transmission
Investments in a Hybrid Power Market,” Energy Pulse
(www.energypulse.net), November 11, 2003.
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